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Monetarists Hope For Renaissance After ‘Correct’ Inflation Call
We should've given the monetarists more credit.
That was one ostensible lesson from the pandemic inflation. I say "ostensible" because not everyone believes it.
Monetarists will tell you otherwise, but the theories they espouse were, in fact, discredited a long time ago, and on any number of occasions since then.
Even a blind squirrel finds a nut every now and again, and the monetarist cause was helped immensely by the sheer scope of money supply growth in COVID's wake.
We can debate whether
Yeah, simple theories to help explain complex mechanisms are always attractive. Sadly, often wrong as well.
I was chatting about the original story this morning with a fellow old dinosaur. He rightfully pointed out that some of the decline in m-2 growth was due to Fed actions.
More interesting to me was the reference to falling monetary velocity. Didn’t we see this in 2009 when QE was being rolled out? Speaking to the idea that the “printing” a trillion dollars has limited impact on the economy if it is all stacked up in $100 bills and left in a secure vault at Fort Knox.
I think it’s misleading to only show rate of change in M2 rather than accompany it with an absolute measure or maybe relative to GDP. The last time I looked, that number is still really big- there are a lot of dollars still to absorb.